** BREAKING NEWS ** Guitar Center, Fender, and NAMM Sued

[Lesfunk]

** BREAKING NEWS **

Guitar Center, Fender, and NAMM Sued
FTC Case Thrust Back into the Spotlight

A Brooklyn, N.Y., man has filed an antitrust class action lawsuit against Guitar Center, Fender and NAMM, claiming that the three conspired to raise prices on acoustic and electric guitars, violins, amplifiers, and strings between January 1, 2005, and December 31, 2007, in violation of the Sherman Antitrust Act. Several accusations were made in the lawsuit, as listed below. Among them is the statement, “Guitar Center possesses, and has demonstrated, a dangerous probability of achieving monopoly power in the relevant market. Guitar Center continues to dominate this market through…unlawful conduct.”

Lead plaintiff David Giambusso purchased a guitar from Guitar Center in 2007. The lawsuit directly refers to the FTC investigation against NAMM, which was settled earlier this year. The complaint, filed on Sept. 11 in the United States District Court Southern District of California, claims Guitar Center could easily inflate prices due to its size. “Guitar Center is the only national chain and is viewed as dominant in the retail market, with 295 stores and the industry’s largest mail order and sales of $2 billion….Guitar Center dwarfs its next-largest competitor. Sam Ash is the No. 2 musical instrument retailer in the United States and operates 45 stores in California, Texas, New York, and nine other states....According to independent retailers, Guitar Center wields enormous power in the industry….Accordingly, retailers such as Guitar Center were able to raise prices above and beyond what they would be under competitive conditions.”

The lawsuit names Fender as a defendant. However, it is not mentioned by name in the 20-page document. However, Fender and Guitar Center are perhaps being referred to when the lawsuit points out, “The overall effect of [the] defendants’ anti-competitive, exclusive scheme has been to substantially foreclose and impair competition.” Their actions “stifled actual or potential rival manufacturers” that “would have achieved much greater sales than they actually did…given the cheaper prices that they charged…and would have posed a far greater competitive threat to [the] defendants.” Because of these actions, “Members of the class [consumers] were compelled to pay, and did pay, artificially inflated prices for the musical instruments they purchased.”
The lawsuit claims, “Guitar Center has conspired with NAMM to control prices and exclude or destroy competition in the relevant markets and engaged in other acts with the specific interest to achieve monopoly power in the relevant product market.”

NAMM is also blamed because the FTC “alleged that, between 2005 and 2007, NAMM organized various meetings and programs for its members at which competing retailers of musical instruments were permitted and encouraged to exchange information and discuss strategies for implementing minimum advertised price policies, the restriction of retail price competition, and the need for higher retail prices.”
The lawsuit specifically states, “During the class period (2005-2007), NAMM was the industry’s vehicle to control prices in the United States fretted instrument product market.”

The suit seeks punitive and treble damages, an end to the alleged illegal practices, and a recovery of the plaintiffs’ attorney fees. Treble damages is a statute that permits a court to triple punitive damages and are common in antitrust lawsuits. The plaintiffs are being represented by Mark Tamblyn of Wexler Wallace LLP and Squitieri & Fearon LLP.

Editor’s Note: The Music & Sound Retailer is merely reporting allegations as filed and stated in the class action lawsuit mentioned above. We do not agree, disagree or comment about any of the allegations put forth in this lawsuit.



Sincerely,
Brian Berk

Editor Music & Sound Retailer
25 Willowdale Ave.
Port Washington, NY 11050
516-767-2500 x 704

[capnsandwich]

So does this mean that American Fender Jazz Basses will be $700 again?

[Lesfunk]

Antitrust litigation... pretty serious. Yes?

[Simo98]

I really don't understand how they can be sued for this?

They are not price fixing with other stores? and its not their fault that there competition is not as big.

[KeithBMI]

I payed something like $550 for my Geddy Lee bass. Now the price is $1200

[Lesfunk]

Originally Posted by Simo98

I really don't understand how they can be sued for this?

They are not price fixing with other stores? .

Yes, They are accused of that here.....

NAMM is also blamed because the FTC “alleged that, between 2005 and 2007, NAMM organized various meetings and programs for its members at which competing retailers of musical instruments were permitted and encouraged to exchange information and discuss strategies for implementing minimum advertised price policies, the restriction of retail price competition, and the need for higher retail prices.”
The lawsuit specifically states, “During the class period (2005-2007), NAMM was the industry’s vehicle to control prices in the United States fretted instrument product market.”

[irishryno]

Originally Posted by Lesfunk

Antitrust litigation... pretty serious. Yes?

you can see some large fines which will trickle down. prices will not go down as an arguement can be made about the current economy. really the best thing you can do is boycott and make yourself heard. buy more sx

[Simo98]

somehow i managed to miss that bit after reading it 3 times

makes sense now.

[knumbskull]

Originally Posted by Lesfunk

Lead plaintiff David Giambusso purchased a guitar from Guitar Center in 2007.

mentalist with too much time on hands vs. The Man


...surely??

i may be proven wrong in due course.

EDIT on a more serious note, yes, competitors sharing market information is indeed just cause for litigation. but honestly, hasn't he got anything better to do?

[john turner]

why's he including namm in the suit? that's absurd - implementing policies about how to price is not the same as fixing prices.

i'd be interested to see how this plays out - namm is hurting, doing these kinds of "hookup" things is helping it to maintain its raison d'etre in the industry.

[mike_v_s]

If they lose, Guitar Center will have to raise prices to pay off the fines. Oh, the irony.

Mike

[7StringBassist]

Originally Posted by mike_v_s

If they lose, Guitar Center will have to raise prices to pay off the fines. Oh, the irony.

Mike

quoted for truth

and during the hearing kayne will interrupt the proceedings

[Jimmy Bones]

On top of that, he'll mention how easy bass is to play because it only has four strings.


And he'll say it through a vocoder.

[irishryno]

and people with no taste or musical ablility who are used to being spoonfed what is "popular" will bow down and pay homage to the recording industry who will take credit for the entire incident and charge us for the right to play it on youtube so we can reach our goal of 1 million views and get talked about on web soup....now im gonna go hammer another pinky toe and take my dog for a walk.

[Eric Perry]

Originally Posted by Jimmy Bones

...And he'll say it through a vocoder.

I lolled!!!

[Thunderscreech]

Originally Posted by irishryno

and people with no taste or musical ablility who are used to being spoonfed what is "popular" will bow down and pay homage to the recording industry who will take credit for the entire incident and charge us for the right to play it on youtube so we can reach our goal of 1 million views and get talked about on web soup...

Imma let you finish, but I think that your first post was the best post ever posted in this thread.

[Ericman197]

Originally Posted by 7StringBassist

quoted for truth

and during the hearing kayne will interrupt the proceedings

Yo Guitar Center,

I'm really happy for you and Imma let you finish, but Carvin makes some of the best basses of ALL TIME

[gold_member_321]

Originally Posted by KeithBMI

I payed something like $550 for my Geddy Lee bass. Now the price is $1200

Yeahh, I remember they were $750 for the longest time. That's what I payed for mine.

[robd]

Originally Posted by irishryno

really the best thing you can do is boycott and make yourself heard.

+1

I've never spent a penny at GC

[bassrique]

Originally Posted by Lesfunk

Yes, They are accused of that here.....

NAMM is also blamed because the FTC “alleged that, between 2005 and 2007, NAMM organized various meetings and programs for its members at which competing retailers of musical instruments were permitted and encouraged to exchange information and discuss strategies for implementing minimum advertised price policies, the restriction of retail price competition, and the need for higher retail prices.”
The lawsuit specifically states, “During the class period (2005-2007), NAMM was the industry’s vehicle to control prices in the United States fretted instrument product market.”

Originally Posted by john turner

why's he including namm in the suit? that's absurd - implementing policies about how to price is not the same as fixing prices.

i'd be interested to see how this plays out - namm is hurting, doing these kinds of "hookup" things is helping it to maintain its raison d'etre in the industry.

Competitors engaging in secret meeting to raise their prices in unison smells fishy. NAMM being right in the middle is no less fishy.

This will be very interesting.